MANAGEMENT

SUMMARY

CHAPTER 11

CONTEMPORARY ORGANIZATIONAL DESIGN

CHAPTER 11

CONTEMPORARY ORGANIZATIONAL DESIGN

CONTEMPORARY ORGANIZATIONAL DESIGNS

Exhibit 11-1

Contemporary Organizational

Design

What It Is Advantages Disadvantages

Team Structure

A structure in which the entire

organization is made up of work groups or teams

Employees are more involved and empowered

Reduced barrier among functional areas

No clear chain of command

Pressure on teams to perform

Matrix Project Structure

Matrix is a structure that assigns

specialists from different functional areas to work on projects who then

return to their areas when the project is completed. Project is a

structure in which employees continuously work on projects. As

one project is completed, employees move on to the next

project.

Fluid and flexible design that can respond to environmental changes

Faster decision making

Complexity of assigning people to projects

Task and personality conflicts

Boundaryless Structure

A structure that is not defined by or

limited to artificial horizontal, vertical, or external boundaries;

includes virtual and network types of organizations

Highly flexible and responsive

Utilizes talent wherever its found

Lack of control

Communication difficulties

Learning Structure

A structure in which employees

continually acquire and share new knowledge and apply that

knowledge

Sharing knowledge throughout organization

Sustainable source of competitive advantage

Reluctance on part of employees to share knowledge for fear of losing their power

Large numbers of experienced employees on the verge of retiring

Team Stuctures

A team structure is one in which the entire organization is made up of work teams that do the

organizations work

Employee teams design and do work in the way they think is best, but they also responsible

for all work performance results in their respective areas

Matrix and Project Structures

Matrix structure assigns specialists from different functional departments to work on projects

being led by a project manager

Dual chain of command employees have two managers : functional area manager and

product/project manager

The matrix design violates the unity of command principle, which says that each person

should report to only one boss

The Boundaryless Organization

Boundaryless organization is an organization whose design is not defined by, or limited to, the

horizontal, vertical, or external boundaries imposed by a predefined structure

Two type of boundaries :

o Internal the horizontal ones imposed by work specialization and

departmentalization a vertical ones that separate employees into organizational levels

and hierarchies

o External the boundaries that separate the organization from its customers,

suppliers, and other stakeholders

To minimize or eliminate these boundaries, managers might use:

o Virtual organizations

Consists of a small core of full-time employees and outside specialists temporarily

hired as needed to work on projects

o Network organizations

Uses it own employees to do some work activities and networks of outside suppliers to

provide other needed product components or work processes

Learning Organizations

A learning organizations is an organization that has developed the capacity to continuously

learn, adapt, and change

In a learning organization, employees continually acquire and share new knowledge and apply

that knowledge in making decisions or doing their work

ORGANIZING FOR COLLABORATION

An organizations collaboration efforts can be internal (among employees within the organization) or

external (with any stakeholders).

In both types, its important that managers recognize how such collaborative efforts fit with the

organizations structure and the challenges of making all the pieces work together successfully.

Benefits and Drawbacks of Collaborative Work

Benefits Drawbacks

Increased communication and coordination

Greater innovative output

Enhanced ability to address complex problems

Sharing of information and best practices

Potential interpersonal conflict

Different views and competing goals

Logistics of coordinating

Internal Collaboration

Cross-functional teams

o Cross functional teams is a work teams composed of individuals from various

functional specialties

o Team members are brought together to collaborate on resolving mutual problems that

affect the respective functional areas

Task forces / Ad Hoc committee a temporary committee or team formed to tackle a

specific short-term problem affecting several departments

Communities of practice groups of people who share a concern, a set of problems, or a

passion about a topic, and who deepen their knowledge and expertise in that area by

interacting on an ongoing basis

External Collaboration popular in area of product innovation

Open Innovation

Opening up the search for new ideas beyond the organizations boundaries and allowing

innovations to easily transfer inward and outward

Benefits and Drawbacks of Open Innovation

Benefits Drawbacks

Gives customers what they want a voice Allows organizations to respond to complex

problems Nurtures internal and external relationships Brings focus back to marketplace Provides way to cope with rising costs and

uncertainties of product development

High demands of managing the process Extensive support needed Cultural challenges Greater need for flexibility Crucial changes required in how

knowledge is controlled and shared

Strategic Partnerships

Collaborative relationships between two or more organizations in which they combine their

resources and capabilities for some business purpose

Some reasons why such partnerships make sense:

o Flexibility and informality of arrangements promote efficiencies

o Provide access to new markets and technologies

o Entail less paperwork when creating and disbanding projects

o Risks and expenses are shared by multiple parties

o Independent brand identification is kept and can be exploited

o Working with partners possessing multiple skills can create major synergies

o Rivals can often work together harmoniously

o Partnerships can take on varied forms from simple to complex

o Dozens of participants can be accommodated in partnership arrangements

o Antitrust laws can protect R&D activities

FLEXIBLE WORK ARRANGEMENT

As organizations adapt their structural designs to these new realities, we see more of them adopting

flexible working arrangements. Such arrangements not only exploit the power of technology, but give

organizations the flexibility to deploy employees when and where needed. Some different types of

flexible work arrangements:

Telecommuting

Work arrangement in which employees work at home and are linked to the workplace by

computer

Compressed workweek

A workweek where employees work longer hours per day but fewer days per week

Flextime or flexible work hours

A scheduling system in which employees are required to work a specific number of hours a

week but are free to vary those hours within certain limits

Job sharing

The practice of having two or more people split a full-time job

CONTINGENT WORKFORCE

Contingent workforce are temporary, freelance, or contract workers whose employment is

contingent upon demand for their services

Main issues business face with their contingent workers:

o Classifying who actually qualifies as one, because companies dont have to pay Social

Security, Medicare, or unemployment insurance taxes on workers classified as

independent

o The process for recruiting, screening, and placing these contingent workers where

their work skills and efforts are needed, so the right people are in the right places at

the right times in order to get work done efficiently and effectively

o The importance of a contingent employees performance. It is important that

mechanisms be in place to monitor work performance and goal achievement,

especially if the contingent employee is working off-site.

TODAYS ORGANIZATIONAL DESIGN CHALLENGES

Keeping Employees Connected

A major structural design challenge for managers is finding a way to offer flexibility but also

keeping widely dispersed and mobile employees connected to the organization.

Managing Global Structural Issues

No matter what structural design managers choose for their organizations, the design should

help employees do their work in the best most efficient and effective way they can The

structure should support and facilitate organizational members as they carry out the

organizations network.